The year in China 2019

The People’s Republic of China recorded its 70th anniversary at its strongest and most prosperous, but also amid a slowing economy, increased international wariness of its ambitions, and deepening repression. President Xi Jinping maintained a largely non-confrontational approach to the Trump administration’s provocations; official rhetoric instead galvanized China to take advantage of a period of strategic opportunity on the global stage.

Politics

Hong Kong experienced unprecedented protests, initially prompted by the government’s plan to adopt an extradition law, since withdrawn, that opponents feared would allow mainland China to erode the territory’s freedoms. The territory’s chief executive, Carrie Lam, through her own political misjudgment and constraints imposed by Beijing, proceeded to compound the public’s disaffection, dismissing demands such as an independent inquiry into police brutality, despite their broad public support. The protesters, a leaderless movement organized via the internet, employed shifting tactics and creative appeals to attract local and global support. Throughout the summer large, peaceful daytime protests alternated with sometimes fierce evening clashes with police; violence continued to escalate through the fall.

Beijing exercised relative restraint, increasing, but not deploying, its army and paramilitary forces in the city. The city’s economy suffered, not least due to a decline in mainland tourists. Beijing’s unforgiving domestic propaganda about the protests was matched by a global disinformation campaign that caused major social media platforms to intervene. At district council elections in November, pro-democracy candidates won a sweeping 87% of seats, a rebuke and opportunity for de-escalation that the Hong Kong government and Beijing nonetheless appeared poised to disregard.

On the mainland, after last year’s major restructuring of the party-state, 2019 saw no major political or economic reforms. The Fourth Plenum, a gathering of senior Communist officials, affirmed the party’s supremacy over the state and Xi’s centralized leadership. Among the year’s major politically-sensitive anniversaries, Xi attempted to co-opt the spirit of the centenary of the May Fourth Movement, while the 30th anniversary of the Tiananmen Square massacre went unmarked on the mainland. Preparations for a massive parade for the country’s 70th birthday seized up Beijing even more than usual and featured a number of notable new weapons systems. President Xi continued his heavily centralized style of governance, while tolerance for dissent and independent thinking continued to diminish. A Tsinghua law professor was suspended after publishing an essay last year that challenged the country’s increasing authoritarianism. The Unirule Institute of Economics, a think tank which promoted liberal policies, officially closed.

Taiwan’s president, Tsai Ing-Wen, was a beneficiary of the Hong Kong protests heading into the January 2020 presidential election, as Taiwanese rallied to her critical stance towards the mainland. Beijing continued to isolate the island, prompting two more countries to switch recognition from Taipei to Beijing. The Trump administration took both concrete and symbolic steps to support Taiwan, including arms sales, high-level visits, and permission for Tsai to make public transit stops in the United States. In a landmark for the region, Taiwan’s parliament legalized gay marriage. In the Macau Special Administrative region, Ho Iat Seng was selected as the next chief executive of Macau.

US-China Relations

The U.S.-China trade conflict remained at risk of metastasizing into a broader decoupling of the two powers, despite a December agreement to avert new tariff increases and to reduce some previously imposed levies. At one of the trade conflict’s lowest points, the Trump administration reportedly considered making it more difficult for Chinese entities to access American financial markets. Chinese investment in America continued to decline.

The U.S. government concentrated its ire most intensely on technology giant Huawei, repeating concerns that Beijing could use the company to spy on or disrupt other nations’ telecommunications infrastructure. The Trump administration put the company at risk of losing access to critical inputs from American companies without regular license renewals and pressured other countries not to use its products for their telecommunications infrastructure. Huawei sales nonetheless continued to prosper.

The U.S. also stepped up scrutiny of possible technology misappropriation, particularly affecting universities and visas of Chinese students studying sensitive technologies. Universities, while acknowledging the government’s concerns, warned that the scrutiny risked devolving into race-based discrimination and undermining innovation. Fewer Chinese students enrolled in U.S. universities, a lucrative source of revenue.

Amid pressure from the U.S. government and its own employees, Google confirmed it had “terminated” plans to reenter the Chinese market with a censored search engine. A Wall Street Journal reporter’s visa renewal was denied after publishing an article that linked Xi Jinping’s cousin to alleged money laundering in Australia. At the urging of the Trump administration, China took steps to police supplies of fentanyl to the United States, which continues to experience an opioid abuse epidemic.

International Affairs

China continued to make uneven inroads abroad, strengthening its influence in politically and economically vulnerable countries, even as it provoked popular pushback in others. Criticism of the Belt and Road Initiative prompted President Xi to recommit the project to being transparent and financially sustainable. A Pew survey found statistically significant declines in the percentage of people with a favorable opinion of China in 11 countries, versus increases in 7. China’s diplomats took to Twitter – in a way, they fit right in.

The U.S. blacklisted several Chinese entities and firms, and restricted visas for several officials, citing human rights violations in Xinjiang; broader international pressure against the mass detention of Uyghurs was limited, as evidence emerged of a broader crackdown on Islam beyond Xinjiang.The New York Times published a rare leak of internal documents related to the mass detentions. Earlier, the Organization of Islamic Cooperation ‘commended’ China for its treatment of Muslims, a sign of Beijing’s success in silencing international criticism.

Concerns about Chinese interference in Western countries persisted. Australia, in the first full year of a new law designed to counter foreign interference in its politics, continued to debate China’s role in its politics. Australian intelligence deemed China responsible for a hack of its parliament and main political parties prior to general elections in May. With an eye towards China, New Zealand moved to ban foreign political donations. Many US universities closed their Confucius Institutes; universities in several countries were host to scuffles between nationalist Chinese students and Hong Kong sympathizers.

Relations with Canada remained tense. Late last year the country arrested Huawei CFO Meng Wanzhou at the request of the United States; China retaliated by detaining two Canadians, sentencing to death two more who had been previously arrested on drug charges, and imposing economic pressure. The Philippines saw large-scale protests in response to a Chinese vessel that rammed a Philippine fishing boat; President Rodrigo Duterte publicly conceded there was little he could do to retaliate. Over the reservations of other European nations, Italy became the first G-7 country to endorse China’s Belt and Road Initiative.

Economy and Business

China’s economy continued to decelerate as the government opted for targeted interventions instead of large-scale stimulus. GDP growth fell to its lowest in a generation, just above 6%. Unsustainable debt remained a concern as defaults increased and several regional banks required government bailouts. A new study estimated that China had overstated GDP growth and the size of its economy by 12%.

The government released its plan for the Greater Bay Area. Access to credit for private domestic companies remained squeezed, prompting a marked rise in equity sales to state-controlled entities in order to raise capital. China’s tech giants reported steady growth, and Alibaba raised billions in a secondary Hong Kong listing. Car sales were again anemic. African swine fever decimated pork supplies, raising the price of the politically sensitive staple. Luckin Coffee, a local rival to Starbucks founded just last year, spent heavily to open stores at a blistering pace, promising investors it would reach profitability next year. Beijing’s Daxing International Airport opened as the long-term outlook for the aviation industry remained bright.

Many foreign companies sought to reduce their supply chain exposure to China due to the trade war, hurting the manufacturing sector and especially benefiting Vietnam. Paypal became the first foreign company to acquire a Chinese payments license. China moved to extend its emergent social credit system to foreign companies.

Society and Culture

China became the first country to land a vehicle on the “dark side” of the moon, a milestone for its space program. Leading universities amended their academic charters, replacing references to academic freedom with those pledging loyalty to the Communist Party. Wikipedia was blocked in China in all languages, whereas previously only the Chinese edition had been. TikTok, the international variant of the viral video app Douyin made by Chinese company ByteDance, continued to soar in popularity, but also raised concerns about censorship. WeChat, meanwhile, continued to largely fly below the radar, despite its far greater influence among overseas Chinese communities. Beijing employed its usual forms of economic retaliation in response to an NBA team official’s support of the Hong Kong protests; the high-profile nature of the controversy, and a South Park episode parodying American companies’ self-censorship, raised American public awareness of China’s global efforts to police speech deemed counter to the Party’s interests.

Notable books on China published this year included new histories of global Maoism and China-Japan relations; and Chinese perspectives on international relations. American Factory, a documentary about a Chinese glassmaker that sets up shop in Ohio, was widely praised for its even-handed examination of the economic and cultural forces that shape the two countries’ relationship. In Hong Kong, Donald Trump was the unlikely subject of a new Cantonese opera. Preparations for the 2022 Winter Olympics continued apace.

Li Peng, a former premier, died at 90; Wang Guodong, painter of the iconic portrait of Mao that presides over Tiananmen Square, died at 88; Wang Shuping, a doctor who exposed China’s rural AIDS crisis, died at 59; Sidney Rittenberg, once an aide to Mao who, after years of imprisonment, would return to the United States and advise companies seeking to do business in an opening China, died at 98.

Looking Ahead

China’s “period of strategic opportunity” is not ever without considerable risks. In 2020, a still challenging economic environment will test Beijing’s relative restraint with respect to stimulus; resolution to the US-China tensions appears unlikely. Retaliation against Hong Kong’s protesters and the replacement of Carrie Lam are not mutually exclusive possible outcomes. Abroad, China will continue to exploit opportunities to expand its influence, particularly at the expense of the United States, where much hinges on whether American voters will grant Donald Trump a second term of global destabilization and diminishment.